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Question 3 3.75 pts Standard Painting Company is evaluating a possible investment in a new paint shop. The investment will cost $2 million. $1 million
Question 3 3.75 pts Standard Painting Company is evaluating a possible investment in a new paint shop. The investment will cost $2 million. $1 million of the cost is depreciable. The expected increase in EBDT in year 1 (based on the company making the investment) is $500,000. The company's tax rate is 35%. Assume the company uses the 5 year MACRS depreciation method (see below). Calculate the company's net cash flow for year 1 of the project. 5-Year MACRS depreciation schedule. Yr1 .20; Yr2 .32; Yr3 .192; Yr4 115; Yr5 .115; Yr6 .058 $395,000 O $195,000 O $300,000 O $200,000
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